Why is Riba – Interest/Usury Prohibited in Islam?

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Nasihah (Advice): Accursed are those who deal in Riba

Sayyiduna Jaabir Radhiyallahu Anhu narrates that Rasulullah Sallallahu Alayhi wa Sallam cursed the one who consumes riba (usury) and the one who pays it, the one who writes it down and the two who witness it, and he said, “they are all the same.” (Sahih Muslim)

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Question and Answer:

Please provide the reason of why interest is haraam

Interest is prohibited by divine decree. Allah Ta’ala states, “O you who believe, fear Allah and give up what remains [due to you] of interest, if you are indeed believers. But if you fail to do so, then be warned of war from Allah and His Messenger. If you repent, you have the right of the return of your capital; neither will you do wrong nor will you be wronged.” (Quran 2:279)

In light of the Divine Decree, no further reasoning is required. A Muslim’s response when informed of the decree of Allah and his Rasool Sallallahu Alayhi Wa Sallam is, “Sami’naa wa Ataa’na (We hear and we obey)”.

From the logical point of view, one of the primary wisdoms behind the prohibition of interest is to prevent the economic exploitation. This exploitation is the subject of many chapters. It is experienced on both micro and macro levels between individuals chained to the banks with student loans, car loans and home loans and countries chained to world banks and monetary funds with billions and trillions in debt. The system of interest allows for such exploitation that in many cases it is impossible to free oneself from its chains.

The following excerpt from Stats SA’s website exhibits the horrific reality of the interest system: “South Africa’s gross loan debt stood at R2,2 trillion in 2016/17, according to the National Treasury. This translates to about R40 000 per person living in the country. Servicing this level of debt can be expensive. [a gross understatement – author]

Interest payments accounted for 9,2% (or R146 billion) of general government expenditure (R1,58 trillion) in 2016/17. In other words, for every R100 of total spending, R9,20 was used to pay interest on debt. This is more than what was spent on the hospital (R105 billion), tertiary education (R77 billion) and housing (R69 billion) functions during that period.” (http://www.statssa.gov.za/?p=11983)

Through interest, entire countries and their citizens are kept perpetually chained to the ultra-rich. Slavery is of many kinds. While we may have largely done away with physical slavery, financial slavery continues to flourish without hindrance and the primary force behind it is the institution of interest. It is the citizens of the country who through taxation are forced to bear the yoke of this slavery.

One of the evils most detested by Allah is Zulm (oppression). The system of interest allows for such Zulm that hardly anyone on the globe is spared from its oppressive clutches. It, therefore, follows why the prohibition against interest is so severe and why it is described in the Quran as“War with Allah and his Rasool Sallallahu Alayhi Wa Sallam”.

And Allah Ta’ala Knows Best

Mufti Moosa Salie

(The answer hereby given is specifically based on the question asked and should be read together with the question asked. Islamic rulings on this Q&A newsletter are answered in accordance to the Hanafi Fiqh unless otherwise stated.)